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Approved Changes (2)


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Australian Small Business Restructuring Roll-over Bill Receives Royal Assent

Australia's Tax Laws Amendment (Small Business Restructure Roll-over) Act 2016 received royal assent on 8 March 2016 following final passage by both houses of parliament on 29 February. The legislation enables small businesses (revenue < AUD 2 million) to defer the recognition of gains or losses that may arise from the transfer of active assets as part of a restructure of their business, including capital gains tax assets, trading stock, revenue assets and depreciating assets. A number of conditions for the deferral apply, including that the transfer does not result in a change in the ultimate beneficial ownership of the assets, and that each party to the transfer must be either a small business entity, connected or affiliated with a small business entity, or a partner in a partnership that is a small business entity.

The new rules will apply for transfers made on or after 1 July 2016. Click the following link for the text of the legislation as passed and the explanatory memorandum.


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Bulgarian Supreme Court Rules on Criminal Liability of Individuals for Corporate Tax Evasion

Bulgaria's Supreme Court of Cassation recently issued an interpretative ruling concerning the treatment of tax evasion as a criminal offense when involving corporate taxpayers. Under Bulgarian law, tax evasion is treated as a criminal offense when the unpaid amount exceeds BGN 3,000 (~ USD 1,700), with the criminal liability generally only arising for individuals.

In the case of corporate tax evasion, the rulings states that criminal liability may arise for any individual employed or formally commissioned by a company that has evaded tax. This includes not only higher-level individuals, such as appointed executives and managers, but also in-house and third party individuals performing tax-related duties, such as bookkeeping, accounting and tax return preparation. The ruling also states that a civil claim may be made against an individual by the state in addition to the tax assessment claim made by the tax authorities. However, if one claim is collected, the other claim is negated. If repayment is made by the liable individual, or other person on their behalf, the criminal liability is remitted and replaced with administrative sanctions.

Proposed Changes (5)


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Egypt Getting Closer to Introducing VAT

Legislation for the introduction of value added tax (VAT) is reportedly being prepared for a vote in the Egyptian parliament. Draft legislation for the introduction of VAT to replace Egypt's general sales tax (GST) regime has been under discussion for over two years. It was to be ready the end of 2015 and in force in 2016, with changes in the GST regime already made as part of a transition (previous coverage). With a parliamentary vote still pending, it is unclear if a mid-year introduction of VAT would be possible, although major mid-year changes in Egyptian tax regimes have been made in the past.

Additional details will be published once available.


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Italy's Public Audit Office Recommends Increased VAT Rate in 2017 to Offset Direct Tax Cuts

Italy's public audit office (Corte dei conte) has recommended in its 2016 report that Italy increase its value added tax (VAT) rate in order to provide funds needed to offset the planned corporate tax cut to 24% in 2017 and individual tax cuts in 2018. The report suggests using the safeguard clause included in the 2016 budget, which would increase the VAT rate from 22% to 25% in 2017 with a further increase to 26% in 2018.

The 2016 budget safeguard clause and similar clauses in previous budgets provide for an increase in the VAT rate if Italy fails to meet its fiscal deficit targets under EU rules.

Luxembourg-European Union

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Luxembourg to Implement Amendments to EU Administrative Cooperation Directive on the Exchange of Tax Rulings

On 22 March 2016, Bill 6972 was submitted to the Luxembourg parliament for the implementation of amendments made to EU Directive on administrative cooperation in the field of taxation (2011/16/EU) concerning the exchange of cross border tax rulings and advance pricing agreements (APAs). The amendments to the Directive were made on 8 December 2015 (previous coverage), and the automatic exchange of tax rulings and APAs is to begin 1 January 2017. Individual EU Member States need to adopt the laws, regulations and administrative provisions necessary to comply with the new requirement by 31 December 2016.

South Africa

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SARS Draft Ruling on VAT Registration Exemption for Non-resident Suppliers of Electronic Services Through Intermediaries

The South African Revenue Service (SARS) has published a draft binding general ruling for public consultation concerning a value added tax (VAT) registration exemption for non-resident electronic services suppliers when making supplies via intermediaries. In general, a non-resident supplier of electronic services to South African residents is required to register and account for VAT if such supplies exceed ZAR 50,000 (~USD 3,230). The draft ruling sets out the circumstances and conditions under which:

  • An electronic services supplier is not required to register as a vendor in South Africa; or
  • An electronic services supplier will not be required to account for output tax for the supply of electronic services facilitated by intermediaries; and
  • An intermediary is required to account for output tax in relation to the supply of electronic services by an electronic services supplier to a recipient.

Under the draft ruling, such exemption applies when the non-resident only makes electronic supplies through an intermediary that is registered for VAT in South Africa and the non-resident has entered into a written agreement that confirms that the intermediary will account for and pay any VAT due.

The draft ruling is to apply retroactively from 1 April 2015.

Click the following link for the draft binding general ruling. Comments are due by 22 April 2016.

United Kingdom

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UK Business Tax Road Map for Reform

The UK government published a business tax road map that covers the progress of reforms made since 2010, future reforms as included in Budget 2016 (previous coverage), and the impact of the reforms. With the reforms, the UK government will:

  • Continue to reduce tax rates to drive growth, including supporting small business;
  • Build on progress from the last Parliament to tackle avoidance and aggressive tax planning and ensure a level playing field; and
  • Simplify and modernize the tax regime.

Click the following link for the Business tax road map.

Treaty Changes (2)


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Colombian Tax Authority Issues Ruling on the Taxation of "Other Income" under Tax Treaty with Canada

Colombia's National Tax Authority (DIAN) recently published a ruling on the taxation of "other income" as covered under Article 20 of the 2008 income and capital tax treaty with Canada. Article 20 (Other Income) includes that items of income not dealt with in other articles of the treaty that arise from sources in a Contracting State may be taxed by that State. Article 20 provides no other provisions for the taxation of "other income" aside from a 15% tax rate limit applicable in Canada on income from certain trusts.

According to the recent ruling, DIAN's interpretation of Article 20 is that it may tax "other" Colombian-source income by using the applicable withholding tax rates under Colombia's domestic rules. DIAN may also tax "other" Canadian-source income of Colombian residents under domestic rules, while allowing residents to apply for a credit for the tax paid on the income in Canada.


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New Tax Treaty between India and Indonesia has Entered into Force

The new income tax treaty between India and Indonesia entered into force on 5 February 2016. The treaty, signed 27 July 2012, replaces the 1987 income tax treaty between the two countries.

Taxes Covered

The treaty covers Indian income tax, including any surcharge thereon, and Indonesian income tax.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 91 days within any 12-month period.

Withholding Tax Rates

  • Dividends - 10%
  • Interest - 10%
  • Royalties - 10%
  • Fees for technical services (managerial, technical or consultancy) - 10%

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

  • Gains from the alienation of immovable property situated in the other State;
  • Gains from alienation of movable property forming part of the business property of a permanent establishment in the other State;
  • Gains from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in the other State; and
  • Gains from the alienation of shares, other than the above, in a company resident in the other State

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Limitation on Benefits

Article 24 (Limitation on Benefits) includes the provision that a resident of a Contracting State will not be entitled to the benefits of the treaty if its affairs were arranged with the main purpose or one of the main purposes of obtaining the benefits of the treaty.

Effective Date

The treaty applies in Indonesia from 1 January 2017 and in India from 1 April 2017.

The 1987 tax treaty between the two countries will cease to have effect on the dates the new treaty is effective.


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